by Summary:
Simon Wren-Lewis is not yet an MMT convert but moving closer. He is still clinging to the illusion of monetary policy effectiveness and in this piece he does not address the MMT critique of monetary policy. Moreover, he thinks that a floating rate system requires monetary policy rather than freeing the need for it as under a fixed rate convertible system in which interest rate policy addresses demand for conversion. His answer to the question, Is it true that "anything we can actually do we can afford”?, is sort of. That is, yes, with qualifiers. MMT would agree with this although there might be some disagreement over the qualifiers. But the take-away is his agreement with MMT that the state does have a "magic money tree," and the constraint is inflation.While Simon Wren-Lewis doesn't
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Simon Wren-Lewis is not yet an MMT convert but moving closer. He is still clinging to the illusion of monetary policy effectiveness and in this piece he does not address the MMT critique of monetary policy. Moreover, he thinks that a floating rate system requires monetary policy rather than freeing the need for it as under a fixed rate convertible system in which interest rate policy addresses demand for conversion. His answer to the question, Is it true that "anything we can actually do we can afford”?, is sort of. That is, yes, with qualifiers. MMT would agree with this although there might be some disagreement over the qualifiers. But the take-away is his agreement with MMT that the state does have a "magic money tree," and the constraint is inflation.While Simon Wren-Lewis doesn't
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
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Simon Wren-Lewis is not yet an MMT convert but moving closer. He is still clinging to the illusion of monetary policy effectiveness and in this piece he does not address the MMT critique of monetary policy. Moreover, he thinks that a floating rate system requires monetary policy rather than freeing the need for it as under a fixed rate convertible system in which interest rate policy addresses demand for conversion.
His answer to the question, Is it true that "anything we can actually do we can afford”?, is sort of. That is, yes, with qualifiers. MMT would agree with this although there might be some disagreement over the qualifiers.But the take-away is his agreement with MMT that the state does have a "magic money tree," and the constraint is inflation.
While Simon Wren-Lewis doesn't mention it, and in fact, he assumes that central banks have the knowledge and tools they need, the issue then becomes a testable theory of inflation and how to control price stability. But is it so? Former Fed governor Daniel Tarullo wrote a paper questioning this.
Mainly Macro
Is it true that "anything we can actually do we can afford”?
Simon Wren-Lewis | Emeritus Professor of Economics, Oxford University
Anyway, worth a read.
Mainly Macro
Is it true that "anything we can actually do we can afford”?
Simon Wren-Lewis | Emeritus Professor of Economics, Oxford University